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Georgian Wine Returning to Russia

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The FINANCIAL — Georgian wine producer Winery Khareba is among the few companies in Georgia not hiding their efforts to negotiate with Russian partners on exporting wine to the country.

 

David Narmania, President of the Caucasus Institute for Economic and Social Research, thinks that large winemakers will establish daughter companies in order to work on the Russian market undercover.

“We plan to resume exporting wine to Russia. We are currently negotiating with several companies. Russia is one of the largest and most attractive markets for our company,” Beka Khergiani, Export Manager of Winery Khareba, told The FINANCIAL

Winery Khareba plans to export 400,000 bottles in 2012, excluding the share destined for the Russian market.

In 2011 the company exported 50,000 bottles of wine. 80% of the total amount was exported to China, 10% to Poland, 5% to Hong Kong and 5% to Japan.

“As our company was founded in 2004 we were planning to export 90% of total production to the Russian market. We have Russian partners that we deal with and we were just planning to start exporting when Russian officials started the embargo,” said Khergiani. 

After the embargo Winery Khareba entered Chinese, Japanese, Hong Kong and Lithuanian markets instead. “After the Russian embargo we were selling only 10% of total production,” Khergiani added.

The initial marketing plan of the company when it was established in 2004 was to sell the majority of products in Russia.  The embargo was introduced two years later however.

“We have never exported wine to Russia. This market is still interesting for us,” said Koba Mikava, Sales and Marketing Manager of Wineman LTD.

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In 2012 Wineman LTD plans to export 675,000 litres.

“In 2011 we exported 600,000 litres. We export 85% of our production to Ukraine, 12% to Kazakhstan, 1% – Holland, 1% – the USA, 1% – the Czech Republic,” Mikava told The FINANCIAL.

Russian President Dmitry Medvedev said he welcomes the restoration of Russo-Georgian economic relations. It was recently announced by the political party Free Georgia that six Georgian companies are already negotiating with Russians. The names of the companies however have not been disclosed.

Narmania believes that there is no need for such discretion.

“It’s obvious that the Georgian Government will easily find out the names of those companies who are negotiating with Russians. I cannot see the Government’s interest in hampering this cooperation, why should they?” Narmania asks.  

Experts see the risk in returning to the Russian market. “Georgian companies left this market such a long time ago that their niche has already been filled by others. Another problem is dealing with Russian officials.”

“The Russian President’s statement has political and economic motives. The political motivation is having partners among Russia-oriented Georgian politicians. But another reason is the request of the WTO to build free economic relations between countries, especially between neighbours,” Narmania said.

 

 

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